The importance of compliance for businesses

As many Massachusetts business owners know, there are often quite a few steps involved in business creation. However, it is important for business owners to take time out from their day-to-day operations to make sure they don’t overlook seemingly small details that can cause big problems if they are not handled correctly.

Once a business decides to incorporate, it must abide by several laws and regulations that may be very different from the laws in place for sole proprietorships. One of the most common mistakes that the owners of newly incorporated businesses make is failing to maintain a strict separation between their personal finances and their business finances. It is important for businesses to establish separate banking and credit accounts to comply with the law and avoid accounting and liability issues that could lead to trouble in the future.

Another mistake that newly incorporated businesses make is failing to file an annual report or other required paperwork with the state where they are incorporated. Businesses that don’t meet required filing deadlines could face penalties and fines that could negatively impact their business operations going forward. Another seemingly small issue that could have serious ramifications is failing to file the proper paperwork required to allow a business to conduct official transactions under alternate names. Without prior authorization, contracts created using a non-official business name could be have their validity challenged in a court of law.

Growing businesses often face many legal issues that can significantly impact their operations moving forward. Attorneys working in the area of business and commercial law may be able to help business owners to create a business plan that complies with relevant laws and protects their legal interests.

Source: Reuters, “Are You Putting Your Company’s Good Standing At Risk?”, December 12, 2013